Posted on April 14, 2011

Audit: Chicago State University a Financial Mess

Jodi S. Cohen, Chicago Tribune, April 13, 2011

For several months last spring, Chicago State University failed to send bills to its students, one of the more than 40 problems uncovered in the latest audit of the public university.

“That is kind of an elemental responsibility, to bill the students for their classes, their tuition costs. For them to not send any bills for students for spring semester, that is a problem,” Auditor General William Holland told the Tribune in an interview Tuesday.

“The person who needs to be held accountable and responsible at this point is the president of the university,” Holland said.

The taxpayer-funded university has a history of financial mismanagement, and the hiring of new president Wayne Watson in 2009 came with the expectation that new leadership would bring a new way of doing business. The most recent financial review, from July 1, 2009, to June 30, 2010, does not help the university make its case that it has turned a corner, said Sen. Edward Maloney, D-Chicago, chairman of the Senate’s higher education committee.

“There have been changes in administration, there have been changes at the board level, and yet nothing seems to have changed. This is a huge concern,” Maloney said Tuesday, adding that he may call for a special hearing to address the university’s problems. He was unaware of the audit until contacted by the Tribune.


But the scathing audit portrays the 7,000-student university as a financial mess, with federal grants misspent, lax control over contracts and misuse of purchasing cards. The review revealed 41 problems, up from 13 the prior year.


The university didn’t dispute any of the findings in its official response contained in the audit.

“I know on the surface it looks bad for the institution, especially with the history that Chicago State has had. But believe me, this is not all bad,” said Glenn Meeks, the university’s vice president of administration and finance. “It was not until you uncover everything that is there that you are able to see what you are dealing with.”

The audit is the first that covers the period since Watson took over in October 2009. He was “not interested” in speaking to a reporter for this story, according to an outside public relations representative, who referred questions to Meeks. A PR representative later sent comments that she said could be attributed to Watson.

Meeks said the new administration has a “corrective action plan” in place, and already has addressed 85 percent of the problems. The university now has four internal auditors, up from just one, he said. There are new managers of the Jones Convocation Center and in the Office of Grants and Research, including a new position focused on compliance.

The university now electronically tracks purchases and contracts so there is more oversight and less possibility that procedures won’t be followed. The audit found that some vendors began work before contracts were signed, for example.


For example, the audit revealed concerns about the university’s handling of a special $614,000 state appropriation for its new pharmacy program. When submitting invoices to the state for reimbursement, officials included unrelated expenses for food, advertising, natural gas supplied to the university and cleaning humidifiers in the library, according to the audit.

“None of these charges had anything to do with the pharmacy program,” the audit states. University officials told auditors they did not have the pharmacy-related expense documents available by the deadline set by the Office of the Comptroller and “swapped other expenditures in order not to lose the appropriated dollars which it could ill afford to lose.” They told auditors that the university did incur and pay expenses that “fully qualified” for the appropriation.

The comptroller’s office reimbursed the university because there was no reason to question that the expenses didn’t qualify, said comptroller spokesman Brad Hahn.


Chicago State board chair Gary Rozier said he’s confident in Watson and his team. “We can really rectify the situation with the leadership that we have in place,” he said.


Holland said the university has suffered from staff turnover. There were three vice presidents for finance during the period covered by the audit.

Meeks blamed the failure to send bills to students last spring semester on a new bursar, the university employee responsible for students’ tuition accounts. Watson hired a bursar in March 2010, and soon after, officials realized bills weren’t being sent.

That person has since been replaced, Meeks said. He said students’ accounts were always available to them online, even though the university failed to send bills on paper or electronically.

“I can understand how that is a little embarrassing for us,” Meeks said.


It also found the university had “unnecessary or unreasonable expenses” related to a grant from the U.S. Agency for International Development to print textbooks for schoolchildren in Ghana, in western Africa. Prior audits and a Tribune investigation several years ago revealed problems with how the university was spending the funds.

The latest review found the campus spent more than $7,000 on roaming costs for a cellphone and $6,800 to buy “additional airline tickets because the travelers were unaware of the check-in procedures on tickets already purchased.”


He asked the public to reserve judgment until next year’s audit. “That will be the greatest test of changes,” Meeks said. “Many of the findings that surfaced in the 2010 audit will go away. They will disappear.”

Demographics and graduation rate of Chicago State University.